April 26 (Lagos) - Access Bank Plc ( ACCESS
) Q1 2018 results which were published this afternoon showed that PBT came in flat y//y to N 27.4bn. The flattish earnings y/y was mainly driven by a 55% y/y spike in loan impairment charges. Moving up the P&L, pre-provision profit advanced by 9% y/y.
Although both revenue lines contributed to the y/y growth in revenue, the non-interest income line which was up by 15% y/y was the key driver. This revenue line was boosted by a remarkable growth of 407% y/y to N27.7bn in income from fx swaps, which completely offset a net fx loss of -N6.8bn. Funding income grew by around 5% y/y.
Further down the P&L, PAT declined by 24% y/y because of a negative result of –N5.3bn in other comprehensive income. Sequentially, PBT grew by 283% q/q. Again, non-interest income which was up by 106% q/q was the key driver. A 77% q/q reduction in loan loss provision also contributed to the sequential growth in earnings. Despite the negative result on the OCI line, PAT grew by 19% q/q.
Compared with our forecasts, PBT beat by 11%, mainly because of the positive surprise in non-interest income. However, PAT missed by 22% due to the negative surprise in OCI.
Access Bank’s loan book was flattish y/y, in contrast to the q/q decline in loan growth showed by other banks that have reported Q1 2018 results. Management had guided to a 10% y/y growth in loans for 2018E in other to compensate for declining yields on T-bills and supported by improving macro-fundamentals.
When annualised, Access Bank’s PAT implies a ROAE of around 13%, well short of management’s 20% guidance. Consequently, we would be looking to see if this ROE guidance will be revised on the bank’s conference call which is billed to take place later this week.
Access Bank’s Q1 PBT tracks broadly in line with consensus 2018E PBT forecasts. Consequently, analyst expects to see limited revisions to consensus 2018E PBT forecast and a subdued reaction from the market.
Analysts at FBN Quest in Ikoyi rate ACCESS
shares Neutral. Their estimates are under review.
reporting for easykobo.com on Thursday, April 26 2018 from Lagos, Nigeria
Source - analysts at FBN Quest in Ikoyi
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